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Trade Blocks and the Gravity Model: Evidence from Latin American Countries


  • Carrillo-Tudela, Carlos

    () (University of Essex, UK)

  • A Li, Carmen

    (University of Essex, UK)


We apply the gravity model to examine the effects of the Andean Community and Mercosur on both intra-regional and intra-industrial trade in the period 1980- 1997. After accounting for size distance and competitiveness effects, the Andean Community preferential trade agreements had a significant effect on the reference products but only a marginal effect on the differentiated products, in particular capital-intensive goods. Mercosur preferential trade agreements had a significant positive effect only on the capital-intensive subcategory of the reference products.

Suggested Citation

  • Carrillo-Tudela, Carlos & A Li, Carmen, 2004. "Trade Blocks and the Gravity Model: Evidence from Latin American Countries," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 19, pages 667-689.
  • Handle: RePEc:ris:integr:0284

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    References listed on IDEAS

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    Cited by:

    1. Nazia Gul & Hafiz M. Yasin, 2011. "The Trade Potential of Pakistan: An Application of the Gravity Model," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 16(1), pages 23-62, Jan-Jun.
    2. Craig Macphee & Peter Cook & Wanasin Sattayanuwat, 2013. "Transportation and The International Trade of Eastern and Southern Africa," South African Journal of Economics, Economic Society of South Africa, vol. 81(2), pages 225-239, June.
    3. Rojas, Gina E. Acosta & Calfat, Germán & Flôres Junior, Renato Galvão, 2005. "Trade and infrastructure: evidences from the Andean Community," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 580, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    4. Acosta Rojas, Gina E. & Calfat, Germán & Flôres, Renato G., 2006. "Trade and infrastructure in the Andean Community," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    5. Letouzé, Emmanuel & Purser, Mark & Rodríguez, Francisco & Cummins, Matthew, 2009. "Revisiting the Migration-Development Nexus: A Gravity Model Approach," MPRA Paper 19227, University Library of Munich, Germany.
    6. Irena Mikolajun & Jean-Marie Viaene, 2015. "Trade, Factor Mobility and the Extent of Economic Integration: Theory and Evidence," CESifo Working Paper Series 5481, CESifo Group Munich.
    7. Cardamone, Paola, 2007. "A Survey of the Assessments of the Effectiveness of Preferential Trade Agreements using Gravity Models," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 60(4), pages 421-473.
    8. Endo, Nobuaki, 2007. "International trade in air transport services: Penetration of foreign airlines into Japan under the bilateral aviation policies of the US and Japan," Journal of Air Transport Management, Elsevier, vol. 13(5), pages 285-292.
    9. Irena Mikolajun & Jean-Marie Viaene, 2015. "Trade, Factor Mobility and the Extent of Economic Integration: Theory and Evidence," Tinbergen Institute Discussion Papers 15-096/VI, Tinbergen Institute.
    10. Charles Kunaka & Robin Carruthers, 2014. "Trade and Transport Corridor Management Toolkit," World Bank Publications, The World Bank, number 18241.
    11. Xu WANG & Ryan P. BADMAN, 2016. "A Multifaceted Panel Data Gravity Model Analysis of Peru’s Foreign Trade," Turkish Economic Review, KSP Journals, vol. 3(4), pages 562-577, December.
    12. Amita Batra, 2004. "India's global trade potential: The gravity model approach," Indian Council for Research on International Economic Relations, New Delhi Working Papers 151, Indian Council for Research on International Economic Relations, New Delhi, India.
    13. Buys, Piet & Deichmann, Uwe & Wheeler, David, 2006. "Road network upgrading and overland trade expansion in Sub-Saharan Africa," Policy Research Working Paper Series 4097, The World Bank.
    14. Vlontzos, George N. & Duquenne, Marie-Noelle, 2007. "Evolution of trade flows for sheep milk cheese: an empirical model for Greece," 105th Seminar, March 8-10, 2007, Bologna, Italy 7884, European Association of Agricultural Economists.
    15. Yeboah, Osei-Agyeman & Parker, S. Janine, 2009. "Impact of Expanded United States Sugar Imports from CAFTA Countries on the Ethanol Market," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46027, Southern Agricultural Economics Association.
    16. Paul Hallwood & Ian W. Marsh & Joerg Scheibe, 2004. "An Assessment of the Case for Monetary Union or Official Dollarization in Argentina, Brazil, Chile, Uruguay and Venezuela," Working papers 2004-13, University of Connecticut, Department of Economics.
    17. Cortes, Maria, 2007. "Composition of Trade between Australia and Latin America: Gravity Model," Economics Working Papers wp07-19, School of Economics, University of Wollongong, NSW, Australia.
    18. Konchyn, Vadym, 2006. "The Evolution of Ukrainian Economy: New Trade Theory Evidence," MPRA Paper 588, University Library of Munich, Germany, revised 07 Sep 2006.
    19. Hallwood, Paul & Marsh, Ian W. & Scheibe, Jorg, 2006. "An assessment of the case for monetary union or official dollarization in five Latin American countries," Emerging Markets Review, Elsevier, vol. 7(1), pages 52-66, March.
    20. Rahman, Mohammad Mafizur, 2005. "The Determinants of Bangladesh's Trade: Evidence from the Generalized Gravity Model," Working Papers 3, University of Sydney, School of Economics.

    More about this item


    gravity model; bilateral trade; trade blocks; Andean Community and Mercosur;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration


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